Cedar Pacific wants to increase its student accommodation in capital cities.

Fund manager Cedar Pacific is looking to raise up to $600 million to invest in new student accommodation projects across Australia’s capital cities, eyeing the tight residential market near major universities.

The group expects to draw backing from superannuation funds and high net worth individuals for projects to be managed by student accommodation manager UniLodge.

The raising comes as several groups eye Australia’s relatively underdeveloped student accommodation market in comparison with the US and Britain, offering options to students beyond a pricey private rental market.

Scape Australia last week won $250m in investment from Allianz Real Estate towards its $500m fund to develop projects across the major capital cities.

The raising followed Scape’s opening of a new student accommodation tower in the Melbourne CBD, which saw strong demand.

Other groups such as Redefine Properties and GSA have been active locally, while the troubled Blue Sky Alternative Investments also has student accommodation.

Cedar Pacific, which is a fund manager exclusively focused on student accommodation, has 10 projects under way across Australia and New Zealand and will now raise between $400m and $600m for developments across the capital cities.

The group was last year tapped to deliver student housing at the Perth City Link development alongside Hong Kong’s Far East Consortium’s work on a shopping and entertainment complex.

“The student accommodation sector in Australia has had significant investment in recent times, but still remains immature compared to the more mature markets of the United States and the United Kingdom,” Cedar Pacific chief operating officer Paul Fell told The Australian.

“The quality of Australia’s universities are very strong, and they’ve been very successful in attracting international students into our market.”

Mr Fell said residents of purpose-built student accommodation projects also benefited from the collegiate environment, with mentoring and tutoring opportunities, that could help them perform better academically.

“Often decision-makers in that regard are parents, and they like the security of purpose-built student accommodation, particularly for international students,” he said.

He noted the tight residential rental market, adding that he is focused on creating both higher end and more affordable options for students.

But he acknowledged that the sector faces some short-term risks in markets that have seen significant investment made, such as Brisbane.

“That may create some excess capacity but we think that’s a short-term and not a long-term risk,” he said.

The group hopes to enter the Sydney market where it has been finding the cost of land too high.